National High Court 2008 Before 0912 (Law No. 26, 2008)

The propriety of a disposition taking the conversion acquisition value as it is deemed unclear of the value of the land and building;

It is difficult to reasonably calculate the value of each real estate due to lack of objectivity and reality by determining the price of the land at a lower level than the appraisal value of a financial institution for the prices of neighboring land of the standard market price, and the price of the building is too high.

The contents of the decision shall be the same as attached.

Article 94 (Scope of Transfer Income Tax of Gu)

Article 96 (Value of Transfer)

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of capital gains tax of KRW 91,216,810 for the Plaintiff on October 5, 2007 shall be revoked.

1. Details of the disposition;

A. On October 2, 2003, the Plaintiff acquired a total of 634.4 square meters (around 192 square meters for the above 71-2 square meters and the above 71-200 square meters for the above 71-20 on December 20, 2003, the land was combined; hereinafter the same shall apply) of the total area of 376.9 square meters for the second-story housing (cafeteria and housing; hereinafter the building of this case) on the ground, and completed the construction work on July 14, 2004.

B. On November 24, 2005, the Plaintiff sold the instant land and building to the ○○ School (hereinafter “○○ School”) by selling it, and on March 31, 2006, the transfer value of the instant land and building was 1.2 billion won (=land 720,000,000 + building 480,000,000), and the acquisition value was 1,109,773,29 won (=land 660,000,000 + building 449,73,299 won). The Plaintiff reported and paid the relevant tax base of capital gains tax to the actual transaction value.

C. The director of the Daejeon Regional Tax Office: (a) acknowledged that the actual transaction value was refunded and the transfer value of the instant land is unclear; (b) so, the transfer value is calculated by dividing the total purchase price of 1.2 billion won by the standard market price of each asset at the time of transfer, and calculated the transfer value of the instant building as KRW 216,640,620; and (c) ordered that the transfer value of the instant building be corrected as KRW 207,214,113, as the actual transaction value at that time is unclear; and accordingly, (d) on October 5, 2007, the Defendant corrected and notified the Plaintiff of KRW 31,216,810, the transfer income tax of the instant building for the year 206 (hereinafter the instant disposition) (hereinafter the instant disposition).

D. The Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but was dismissed on June 26, 2008.

[Ground of recognition] Facts without dispute, Gap 1 through 9 evidence, Eul 1 through 9 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

At the time of the conclusion of the instant sales contract, the Plaintiff and ○○ Association clearly stated that the land of KRW 720,000,000 for the total purchase price of KRW 1.2 billion, and the building amounting to KRW 4801,00,00 for the building was objectively reasonable price. However, it is unreasonable for the Defendant to view that the classification of the value of the instant land and the building is unclear.

(b) Related statutes;

Article 94 (Scope of Transfer Income Tax of Gu)

Article 96 (Value of Transfer)

C. Determination

(1) In principle, the transfer value of assets is based on the standard market price at the time of the transfer of the relevant assets, but where a taxpayer or a tax authority provides evidential documents and reports the actual transaction price at the time of transfer and acquisition to the head of the competent tax office, the transfer income tax shall be calculated based on the actual transaction price (Article 96(1)6 of the former Income Tax Act). If a taxpayer of transfer income tax submits a sales contract concerning the acquisition and transfer, transaction confirmation, certificate of seal impression, etc. as evidential documents concerning the actual transaction price, barring special circumstances such as that each of the above evidential documents has been prepared differently from the actual transaction price, the tax authority shall calculate the transfer value based on the actual transaction price on each of the above evidential documents (Article 95Nu3183, Jun. 25, 1996), but even if the transfer value or acquisition value is calculated based on the actual transaction price, if the distinction of the value of land and buildings, etc. is unclear, it shall be calculated pro rata

(2) We examine whether the value of the instant land and the building is divided.

(A) According to the above evidence, the facts of the transaction are recognized according to the results of the fact inquiry into the ○○○ Council of this court, and the entries of Gap evidence No. 11 through 14 alone are insufficient to reverse the above recognition.

① In the instant sales contract, each of the sales proceeds of land and buildings is divided into KRW 720 million and KRW 480 million.

② The Plaintiff presented KRW 1.5 billion at the initial sale price. On the other hand, ○○ school held that the market price of surrounding land is KRW 400-5 million per square meter, and thus, if the usual price of the instant land does not exceed KRW 5 million, the Plaintiff asserted KRW 1.2 billion at the total purchase price, taking into account the fact that the buildings are newly constructed.

③ After the instant purchase price was determined as KRW 1.2 billion, the Plaintiff demanded the person in charge of the ○○ Association to divide the price of the land into KRW 720,00,000,000, and the price of the building into KRW 480,000,000. The ○○ Association only limited to the total purchase price, and there was no interest in classifying the land and the building price. As such, even though the building price required by the Plaintiff was too high, it was allowed to enter into a special agreement to the sales contract as it was for the purpose of sexual intercourse.

④ Although the ○○ association was unable to establish a social welfare facility by acquiring not only the original land but also the surrounding land, it was difficult to implement a plan to build the social welfare facility at the same time. However, the instant building that did not acquire the surrounding land is partially remodeled and repaired, and used as a church’s landscape, public room, or wedding room.

⑤ On June 19, 2006, 000, 000 square meters and above-ground buildings were purchased on the side of the instant land and KRW 580,00,00. At that time, 00 square meters and above-ground buildings were purchased on the side of the instant land. Since the buildings were deteriorated, only the land did not recognize a separate value, and determined the purchase price.

④ The price ratio of the instant land and building at the time of the Plaintiff’s assertion at the time of transfer is roughly 60% and 40%, but at the time of time, it is KRW 678,808,00 for land and KRW 149,545,930 for building and KRW 149,545,930 for land and KRW 82% for both.

④ On July 11, 2007, 2007, ○○○○○○ Livestock Cooperatives offered the instant land and buildings as collateral and was loaned from the Plaintiff. According to the appraisal report at the time, the instant land price was KRW 900,848,00, and the building price was KRW 177,420,990.

8. The accurate expenses actually incurred at the time of the acquisition of the building of this case cannot be verified.

(B) As shown in the above facts, the price of land and buildings stated in the sales contract of this case is based on the Plaintiff’s unilateral request, and it is difficult to view that the agreement was reached by reflecting the real value of each real estate with the ○○ church in substance. In light of the current standard market price, the average price of neighboring land, and the appraisal price of financial institutions at the time, the price of the building was excessively low, while the price of the building was set excessively high, and the Plaintiff lacks objectivity and reality. Since there is a benefit to reduce the burden of capital gains tax if the value of the land is set lower than that of the building, it is reasonable to view that the distinction between the value of the land and the building under the sales contract of this case is not clear in light of all such circumstances.

(3) The instant disposition is lawful, and the Plaintiff’s assertion disputing this is without merit.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.